Coronavirus Impact: Lawyers Propose Measures to Save Kenyan Taxpayer

In a move to reduce the financial implications of the coronavirus on the economy, the Law Society of Kenya (LSK) has proposed a raft of measures to the State.

LSK wants the National Treasury to implement the measures that are intended to benefit citizens and businesses that are hard hit by the effects of Covid-19 in the country.

One of the proposals is that the government should provide incentives to manufacturers of essential supplies such as sanitisers, toiletries, masks, gloves, vitamins and specialised medical equipment by temporarily lowering the applicable corporation tax for the current year of income.

LSK also wants lower taxes on donations to the Kenya Red Cross, County Governments or any other agency tasked with the management of national disasters.

In a statement, outgoing LSK President Allen Gichuhi also expressed concern over the impact of the coronavirus on low-income Kenyans.

“To cushion these employees from the negative economic impact of the pandemic, we propose a temporary waiver on Pay as You Earn (PAYE) on low-income employees earning Sh23,885 and below per month until Covid-19 is brought under control,” he said.

In the 13-point letter copied to the Cabinet Secretary National Treasury, LSK said every individual is entitled to a personal relief of Sh16,896 per year under the third schedule of the ITA.

This translates to Sh1,408 per month, he said.

“To ensure that the affected individual taxpayers are able to meet their daily expenses and other unplanned expenses, we propose that personal tax relief to resident individuals be enhanced by 100 per cent for taxpayers for the current year of income,” wrote Gichuhi.

Further, LSK wants the mortgage relief increased from the current Sh300,000 per annum to Sh500,000 to provide relief to borrowers whose liquidity is likely to be affected.

The bar association also proposes a 90-day extension period for payment of the taxes in order to accommodate the potential challenges by taxpayers to make payments within statutory time limits.

“This is bearing in mind that April is the first quarter of the financial year for most taxpayers and the due date for the payment of the first installment corporate tax and the balance of the corporate tax liability for the previous financial year,” said Gichuhi.

And to operators in the hospitality industry, the lawyers want the government to grant tax rebates and waivers to cushion them against losses.